JoanieB Posted 23 Sep 2011 , 12:23pm
post #1 of

First and foremost I want to thank everyone here on CC for always having such great advice. I swear, in this business I'm constantly being thrown for a loop.

My neighbor's daughter is getting married and they had met with me to discuss designs etc since I had done party cakes for them in the past. They know that I'm just starting to get in to wedding cakes etc but they're wanting a cake to feed about 450 people icon_eek.gif

After them not mentioning it for a while I assumed they went with someone more experienced especially since it's a huge undertaking and very pricey order. But I got a message from the daughter a couple of days ago wanting to "finalize" her cake order etc. icon_confused.gif Ummmm, first of all, I didn't know they wanted to use me but I figured they were pricing everywhere else and then said well, I guess her price isn't that bad after all.

Anyways, this cake is like $1500 and they asked if they could trade out some of the cost for gift cards at their business. They own a carwash/detail/oil change place. LOL. We take all 3 of our cars there until recently when one of our vehicles ended up with an oil leak. We took it to the shop and they told us don't ever take our cars where we had that oil change done.

My husband said I have to do this cake because these people know everyone and it's great exposure etc. But I have no idea what to say about the gift cards after my husband had only stated just a week ago, "I'm never taking my cars back there again" LOL. I've just resolved to the fact to have to accept some gift cards to keep from affecting our relationship. How much should I accept in gift cards? This is so weird. icon_confused.gif

Then I found out yesterday from my hairdresser that they trade out haircuts for giftcards to their place. And the stylists say they hate it but that they feel obligated. Oh brother, so apparently this is common practice for them to trade services. I guess it would be different if it was something I really wanted. The thing about my neighborhood is there are tons of business owners and they're well to do. I really want to connect with more of them.

44 replies
jlynnw Posted 23 Sep 2011 , 12:42pm
post #2 of

perhaps a "I am just starting up and I can not trade products and services." The cost associated with my business prohibit this. I would not take gift card payment unless it would be something my business could use. My house money and business money are kept separate.

msulli10 Posted 23 Sep 2011 , 12:46pm
post #3 of

I agree with jlynnw. Free car washes/oil changes have nothing to do with your cake business and the money you make gets put into building your business. To quote Jerry Maguire, "SHOW ME THE MONEY" icon_smile.gif

southerncross Posted 23 Sep 2011 , 12:55pm
post #4 of

Wow, talk about a new economy. How much "trade" are we talking about? $750 in car washes? $750 in car washes you'll probably never use? Meaning, your true profit can be counted in pennies after the cost of supplies, etc. ( a cake for 450 is mindboggling)

Are they valuing the coupons from the consumer point of view or from what the cost of that car wash is to them? Let's say the cost of a car wash is $10 if you take your car in but the "cost" to the car wash owner probably much less than $1 per wash. So taking their offer "costs" them only $75 plus $750 in cash for a $1500 cake...no wonder they are pushing this "deal" with all the venders.


On a less rambling note, you have to weigh whether you will get guestimated $750 worth of advertising and good will from baking this discount cake. I will say that last year I took a gamble and deeply discounted a wedding cake just for the chance for exposure to a previously unavailable target market. The gamble paid off and I'm now the exclusive baker for wedding, birthday and celebration cakes for the group. It was only a two hundred dollar discount for that initial cake -- no further discounts were given -- but I've gotten no less than 40 full priced cake offers from the group in the past year that I wouldn't have gotten before.

You could of course regift the car wash coupons for Christmas and birthday gifts for some time to come. I only hope my customers don't start offering to trade cows for cake!

Swede-cakes Posted 23 Sep 2011 , 1:02pm
post #5 of

Oh boy, that puts you in a pickle, huh? I agree with the above posters. Same thing happened to me; was approached by a local friend to trade a sculpted golf fairway cake for his fundraiser, and he'd give us landscaping services at our house. I explained to him nicely that a freshly mulched flower bed just doesn't pay for the order supplies. He laughed, but then asked again, thinking I was kidding. So I explained that our home/personal expenses are kept separate from my business, therefore my policy is not to intermingle the two. He reluctantly agreed to that, and paid for the cake.

It seems not uncommon to find people who'd rather barter than pay, but it has to work for both parties in the deal. If it's not something you'll use, then you're losing money on the deal and they're getting a discounted cake. Good luck, and don't be afraid to stand up for you and your business decisions! thumbs_up.gif

TejasRebel Posted 23 Sep 2011 , 1:06pm
post #6 of

Barter in and of itself can be beneficial to both sides. I've traded cupcakes/cake balls to my hairdresser before and we were both pleased with the results. But if you're not comfortable with the services you'd be receiving or have no use for them, then just say no. Simple as that.

KakeMistress Posted 23 Sep 2011 , 1:18pm
post #7 of

I dont mind doing trades as long as im the one offering to trade, for example I am doing a birthday cake for a friend of mine and her husband is doing tattoos for both me and my husband so it works out for both of us, the previous trade I did was for 2 tungston carbide wedding rings and well I got screwed in the deal not knowing they couldnt be resized and that also means you cant resell them to anyone, who is going to buy a ring they cant resize? if its worth it to you then go ahead.

bakerliz Posted 23 Sep 2011 , 1:24pm
post #8 of

If you think it's really going to connect you with all those people, I would take some of the gift cards. Just think of it as a discount since you won't use them. Figure out how much you would discount the cake to get the exposure and offer to accept that amount in gift cards. maybe your husband won't mind taking your cars their for washes only and if not, you can always re-gift icon_wink.gif

TexasSugar Posted 23 Sep 2011 , 2:04pm
post #9 of

Honestly, if you have no plans of using their service why would you accept a gift card? I you are going to do that, you might as well just knock money off the order. Car washes/oil changes are not going to pay your electricity in the next few months. Car washers/oil changes are not going to pay for all the supplies.

So in the long run you will be out of money, and have a gift card for a service you don't really want, that will take a while to use them up.

I don't know about you, but I need cash more than I need a car wash or oil change. Well I do need a oil change, but I have a brother that does that for me.

They are asking you to accept the gift cards, so that they don't have to pay the extra money. As was mentioned in an above post, the value of the cards is not the same value as what the cost of the car wash is for them. Plus since it is a business, I'm sure they write those off in some way.

I would just simply say, "At this time I can not accept gift cards in place of money." No need to explain, no need to offer a reason. It is your business, you run it how you want to, you accept what you want to, and it doesn't matter what their deal with other businesses are.

gatorcake Posted 23 Sep 2011 , 2:38pm
Quote:
Originally Posted by msulli10

I agree with jlynnw. Free car washes/oil changes have nothing to do with your cake business and the money you make gets put into building your business. To quote Jerry Maguire, "SHOW ME THE MONEY" icon_smile.gif




Actually they do if you use the service and if you take the money you would have spent on car washes/oil changes into your business, and if you got even trade. Yes lots of ifs but if these things are done you will see the money--just over a longer terms which is important to consider.

So if you are not going to use them and not going to be put that money that would have spent toward your business then don't barter.

dchockeyguy Posted 23 Sep 2011 , 2:48pm

The real issue that I didn't see brought up is this (and it applies to both sides really) comes from an accounting perspective. it seems odd they are giving out "business" money for personal things like cakes, haircuts, etc. I realize it's their own business, but that still gets kind of messy. I've always believed that even if you own the business yourself, your business money should be for business things only.

That said, if you have a car you use to deliver and all, maybe you could take some of that in trade for the car ( I realize you had a leak, so not sure I'd want to do that icon_twisted.gif ). But you could also tell her that YOU are trying to keep your books separate and that this is too complicated for that.

sillywabbitz Posted 23 Sep 2011 , 3:22pm

In my head I'm trying to figure out how many times a month you would have to get your car washed to get your money back in a reasonable amount of time. When I first saw the subject line I thought they bride was trying to trade you gift cards (she received) for cake. Like to William Sonoma or Macy's and that idea didn't seem totally off the wall because you could buy things you wanted and needed.

Stand your ground. The fact that the hairdresser didn't have enough gumption to say no is their problem. An easy out is to say "I checked with my account and it is preferred that I do not mix business and personal use money therefore I can not accept gift cards in exchange for product. Please let me know how you would like to proceed."

I understand the exposure is good but the financial loss could be significant and it costs them virtually nothing especially if you never use the gift cards.

If you do decide to accept them, you didn't mention what percentage of the cake they wanted to pay for in gift cards. I would say no more than 10% the cost of the cake. I don't know what your profit margin is but anything more than 10% and I would be very resentful making that cake. Good luck and I hope everything works out for you and your neighbors.

JoanieB Posted 23 Sep 2011 , 4:42pm

Thanks for all the advice you guys are great icon_biggrin.gif I really would like to keep everything seperate because right now practically everything I make goes back into the business. My husband's job allows this but just thinking about the hours to make this thing makes my head hurt.

Not to mention it's two days after Thanksgiving. And to think some of the hours are going towards a carwash/detail makes me feel a little resentful. All the times we've taken our vehicles there they've never given US a break. I will not have them change my oil again that's for sure icon_lol.gif

They haven't mentioned a percentage or anything so I think that can be my call. But 10-15% seems reasonable? I do use my vehicle for deliveries and want it to look pristine. Too bad they don't do a better job when I did take it there paying full price icon_rolleyes.gif

jason_kraft Posted 23 Sep 2011 , 4:43pm
Quote:
Originally Posted by dchockeyguy

The real issue that I didn't see brought up is this (and it applies to both sides really) comes from an accounting perspective. it seems odd they are giving out "business" money for personal things like cakes, haircuts, etc. I realize it's their own business, but that still gets kind of messy. I've always believed that even if you own the business yourself, your business money should be for business things only.



This is a critical requirement for LLC owners, if you mix personal and business finances you can lose the LLC's limited liability protection.

Also, bartering is sometimes used as a way to evade income taxes. If you accepted a barter item instead of cash for an order you would still owe income tax on the net profit from that order (market value of the barter item - your expenses).

JoanieB Posted 23 Sep 2011 , 4:46pm

Jason, you're right. I still have to count that as income! I'm curious how they will be counting their gift cards, as an expense probably.

alvarezmom Posted 23 Sep 2011 , 4:47pm

Bartering works for some people but not all. I started making the cake shooters. My 1st order was for 2 DZ. IN exchange for 1/2 off one of the DZ the photographer she hired would take pictures so I could start advertising them. Great I thought. Until, the day of the baby shower when the photographer didn't show up. I was out $$$, and the pictures I had planned on using.

I will never barter again or offer discounts, at all, even if it helps me out!

luntus Posted 23 Sep 2011 , 5:37pm

Here is how I see it....

they get to pay less for the cake, write off the gift cards as a business expense thus reducing their taxable profit.

You on the other hand get less for your cake, get gift cards you don't really want as well as as include the taxble portion of the gift cards to your income. huh! As well as fuss each time you have to use those darn cards... I know I will.... icon_smile.gif

keep us posted as to what you decide.

luckylibra Posted 23 Sep 2011 , 5:39pm

I have to agree with those that say don't do it. If you do it once... they will assume you will do it again and may start wanting to use gift card trades for every order. If you start off right now saying you can not do to your accounting practices then you are done with it but if you start off accepting it would be hard to use that reasoning later.
My personal experience has not been good either. The guy I pay to mow my grass asked me to make graduation cakes for his son and in exchange was going to do some landscaping.... still waiting on that to get finished and the graduation was in May... what made it more complicated is that he and his wife both work in my building in another department.
Best of luck whatever you decide

jason_kraft Posted 23 Sep 2011 , 5:51pm
Quote:
Originally Posted by luntus

they get to pay less for the cake, write off the gift cards as a business expense thus reducing their taxable profit.



To be fair, if they pay by cash or check they could still write it off as a business expense. We have customers who pay for their kid's birthday cake with a business check, I assume they plan to write off the cost of the cake.

luntus Posted 23 Sep 2011 , 5:58pm

good point Jason....they are in a win win position.
another thing I was thinking was .... what if they have a limit on the cards like vouchers have.... so they can say it is each is worth say 25 bucks for a delux clean or whatever and then raise their prices ..... JoanieB will end up having to pay extra for those services.

jason_kraft Posted 23 Sep 2011 , 6:02pm

It's only a win-win position if the IRS doesn't find out they are deducting personal expenses against their business income. icon_wink.gif

BizCoCos Posted 23 Sep 2011 , 6:07pm

a bad idea in this situation, listen to your intuition/gut feeling. I would not accept gift cards from this client.

southerncross Posted 23 Sep 2011 , 6:10pm

Writing off personal expenses against your business is tax fraud.

ShaunPepe Posted 23 Sep 2011 , 6:13pm

This doesn't sound like a good idea to me. If you decide to do the cake, get paid only in money. I'm afraid this is not going to end well.

MamaDear Posted 23 Sep 2011 , 6:36pm

I would not be open to accepting their gift cards but if it is a deal breaker and you think you may get more business in the end then okay maybe but just for the SERVICE portion of your cakespences.

The way I reason it out is that they are doing labor (car wash, oil change) in exchange for your labor (decorating, delivery, setup). I would only accept a small percentage of gift card payments (as the first deposit) and would be sure to use them up BEFORE the cake is delivered because anyone who would suggest that trade would be suspect in my opinion. In other words, if they don't like your cake end product, they could deny you the use of the service cards and you would lose out. You have already said that they kinda put off deciding to go with you and you thought that was to price other folks out. Hate to be a suspicious person but that is just how I would feel about it.

LKing12 Posted 23 Sep 2011 , 6:39pm

If you do the cake at full price, when guests at the wedding ask, "who made the cake? are they going to tell them someone else? What if the rest of the in-crowd trade business gift cards for their services? I would stay far away from this warped vortex. Money is money and that's what I would expect for my product.

enchantedcreations Posted 23 Sep 2011 , 7:17pm

WOW, just open your purse and take out $$$$ and light a match too it! That pretty much sums it up in my mind. This is not Tit for Tat....... You can rationalize all you want, their business service for your business service, but the bottom line is still the same, it's a their daughter's wedding which is a personal affair. If they choose to pay for the wedding out of their business account that's their private matter, but don't let yourself get dragged into it.........

jason_kraft Posted 23 Sep 2011 , 7:44pm

There's really nothing wrong with bartering in general, in fact it can work out in the vendor's favor -- if you are selling a $100 cake to someone who wants to barter with a service that has a 25% markup, you might be able to negotiate to be paid with $110 worth of services, which would cost the customer $88 to provide. Now that's a win-win, provided that you would actually use the service being bartered (which is not the case in this thread).

cakestyles Posted 23 Sep 2011 , 7:57pm

I think your husband is wrong to tell you that you have to do this cake because these people know a lot of people. What are they the mafia?

There is absolutely no way I'd accept the giftcard arrangement.

My cake business is completely separate from my personal household accounts and my husband keeps his nose out of it. (Except when it's time to pay my quarterly taxes, since he's my accountant lol)


$1500 for that many servings is a good deal. If they can't afford to pay you in full than maybe they should not invite 450 people to their wedding and get a cake they can afford.

enchantedcreations Posted 23 Sep 2011 , 7:58pm
Quote:
Originally Posted by jason_kraft

There's really nothing wrong with bartering in general, in fact it can work out in the vendor's favor -- if you are selling a $100 cake to someone who wants to barter with a service that has a 25% markup, you might be able to negotiate to be paid with $110 worth of services, which would cost the customer $88 to provide. Now that's a win-win, provided that you would actually use the service being bartered (which is not the case in this thread).




Yes, you'd be correct if it's all on the up and up and everyone is going to come out in total agreement, but the OP is not. I would suggest to the OP to mark her cake up mega watts and then take the gift cards... LOL (just kidding, Jason, little cake humor on Friday afternoon)

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